Using Productivity Metrics to Measure Insurer IT Success


IT is a significant expenditure. Technology organizations are often asked to justify their spending by demonstrating the impact of IT costs on business outcomes and evaluating the effectiveness of IT investments. While IT metrics have a role to play and IT managers have a need to measure the quality and productivity of their team’s performance, these metrics are horizontal and don’t necessarily capture the business impact of these investments.

I recently wrote about business metrics in Aite-Novarica Group’s report Insurer Productivity Metrics, which focuses on four functions—agency management, underwriting, claims, and contact centers—from the perspective of IT involvement.

Internally focused IT metrics are not effective in conveying the productivity value of a technology organization. IT metrics have a place and can enable IT management to measure the performance of their teams to drive efficiencies, improve quality, and establish and monitor service-level agreements—which often have KPIs incorporated into them. From a business perspective, though, what purpose does it serve to tout a low defect rate if the technology does not support improved business outcomes? Or that a developer produced a hundred lines of code when five lines would have sufficed?

While business-oriented metrics can’t solely be measured by IT’s performance, there are some best practices when determining how best to measure the impact of IT. Depending on the metric, consider varying periods such as daily, weekly, or monthly for metrics that are measuring activity. For metrics measuring quality, impact, and activity, consider periods of rolling three months, 12 months, year to date, quarter to date, month to date, or year over year. Many of these metrics can be calculated for individuals, teams, departments, and the enterprise overall.

The definition of “success” can also vary depending on the market, channel, line of business, premium amount, and loss amount. For example, it would be inappropriate to judge rural- and urban-based marketers against the same agency visit count goal. The additional “windshield time” the rural-based business developer incurred would imply a lower target. Perhaps the best measure of success is consistent improvement over time.

As IT becomes a more critical part of delivering insurance services, understanding the performance of those services is the best way to demonstrate that value. The biggest challenge for insurer CIOs is securing budgets, and the key to doing that is by having management and peers acknowledge and recognize the value IT brings. To learn how to apply key, insurance-specific productivity metrics that demonstrate IT’s business impact, access the full report here.